Methods: Thirty subjects with T2DM will participate in following studies: (i) oral glucose tolerance test (OGTT); (ii) Dual energy absorptiometry(DXA) for body fat content, (iv) skeletal muscle biopsy. Subjects will be randomized to receive either placebo or pioglitazone for 24 weeks. The investigators will study the effect of Pioglitazone on (1) TIMP and TACE substrate activity in skeletal muscle, adipose tissue, mononuclear cells, and their relationship to insulin sensitivity and vascular reactivity, other adipocytokines- resistin, TNF-α and Visfatin; (2) markers of inflammation and atherosclerosis- C-reactive protein, VCAM-1 (vascular cell adhesion molecule 1), ICAM-1 (Intercellular Adhesion Molecule 1), endothelin 1, E-selectin, P-selectin, TNFrecI (Tumor Necrosis Factor Receptor I), TNFrecII (Tumor Necrosis Factor Receptor II), IL-6 (Interleukin 6) receptor.